Question

Solve: find the Set of Solution. (7x2-6x+55)=0 The demand functions for two interdependent commodities are given by: QD1 = 20 - 4P1 +2P2 QD2 = 10 + 4P1 - 4P2 The supply functions for two interdependent commodities are given by : QS1 =-6 + 4P1 QS2 = -4+6P2 Where Di QSi and Pi denote the quantity demanded, quantity supplied and Price of good i respectively Determine the equilibrium price and quantity for this two-commodity model./ (Ctrl)

Answer 1

1. 742-64 +55=0 From soi-d havyachary a method n=6+ V(-6) ²-4 (7) (SS) 207) = 6 -1504 2 (7) = 6+ (38.78) 14 = 0.4 3 + 2771 -) = 0.43 +237 i OY 2=0.43-2.777 2. OP1 = 20 - 4 P1 +2 P2 OD 2 = 10 + 4 P1 -4 P2 s 7 = -6+ 4 P1 -4+6 P2 0522 For equilibrium ODI =Qsi -) 0 D4 = Q S1 2.0 - 4 P 1 +2 P2 = -6+4 P1 26 +2P2 = 8 P1 13 + P 2 = 4P 1 (I I =) QD 2 = QS2 10 +4P1 - 4P2 = - 4 +6P2 14 + 4 P1 = 10 P2 7+2 P1 =SP2

Applying 20, we get 14 + 4 P1 = 10 P2 -) 14 + (13+P2) = 10 P2 (From ☺ ile, 27=9 P2 -1) P2 = 27 = 3 9 Now, 14 + 4 P1 = 10(3) 4 P1=30-14 4 P1= 16 P1 = 16 = 4 4 si Equilibrium price of Pl and P2 are 4 and 3. Quantity of this two commodity model. is Q D = Q S 1 = 13 + P2 = 13+3 = 16 P2 = 0.52= 7+2 P1 = 7+2 (4) 7+8 = 15